“HSBC Holdings Plc (HSBA), Europe’s largest bank by market value, posted a decline in full-year profit after paying a record penalty for compliance failures and said costs rose for a third year, missing its target.
Pretax profit for 2012 dropped 5.6 percent to $20.65 billion, trailing the $23.49 billion estimate of 26 analysts surveyed by Bloomberg. Revenue fell 5.4 percent to $68.33 billion from $72.28 billion, HSBC said today in a statement. The shares declined as much as 3.5 percent in London trading.
Chief Executive Officer Stuart Gulliver is being thwarted in his plan to reduce costs to 48 percent to 52 percent of revenue as the London-based lender set aside $1.9 billion to settle U.S.money-laundering probes and boosted spending on compliance by $500 million. Expenses as a proportion of revenue climbed to 62.8 percent from 57.5 percent, and wage inflation in markets such as Latin America is increasing, HSBC said today.
HSBC’s surging costs “illustrate the size of the financial performance gap to be closed,” Ian Gordon, an analyst at Investec Plc in London who has an add recommendation on the shares, wrote in a note to clients today…..”
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